Spending too much on improving your home is a real mistake in the real estate game.
It’s called over-capitalising, and it means you’ve spent more money on a renovation than you’ll get back in return when the time comes to sell.
The most common areas to over-capitalise are in the kitchen and bathroom. It’s easy to be a little overwhelmed by the bright lights of those showrooms and spend upwards of $50,000 before you know it.
As experienced agents, we can assure you a modest budget can still deliver the maximum value when it’s time to sell.
Let’s start by addressing a basic rule of engagement: If you’re selling a family house or apartment, you need to attract a broad range of potential buyers.
Investing in high-end furnishings and finishes can alienate many buyers because you’ll want the renovation costs baked into your asking price. And if you don’t, then it’s odds-on you’re taking a loss on those improvements.
Of course, every scenario is going to be different. Here are five tips to help you think carefully about any renovations you might undertake before putting your home on the market.
- Call your agent! Ask your agent for an appraisal of your home before you start the renovation work. Ask about buyer preferences and the improvements that might command a price premium. If you don’t, you’ll be splashing the cash without understanding the market. And that’s crazy. We can also suggest areas where you might curb spending or leave alone because it won’t add value.
- Don’t overdo the DIY. It’s tempting to save money by completing the work yourself. But unless you’re a professional, the finish might not be optimal. That’ll alienate some potential buyers and may negatively affect any price negotiation.
- Don’t shoot too high. Avoid trying to capture the top-end of the market. This will limit the number of potential buyers. Aim your renovations towards the mid-market, where you’ll find the most buyers willing to pay a competitive asking price.
- Forget top-of-the-range finishes. Remember, you won’t be living in your home for much longer, so you’ll never get the benefit and enjoyment of these luxuries. And unfortunately, the market may not value them. So stay conservative with your spending to achieve a positive financial result.
- Don’t kick first impressions to the kerb. Every agent will tell you kerb-side appeal is critical. Simple cosmetic upgrades are great at the front of the property. Inside, you can make a big impression with little touches, such as updating door handles, light switches and power points. This is especially important in the more confined space of an apartment.